IEA forecasts global EV sales to surge by 35% in 2023, will acquire 18% share of global car market

Global electric vehicle sales are set to surge by more than a third in 2023 on the back of continued support from government policies across China, Europe and the United States, according the latest Global Electric Vehicle Outlook released by the International Energy Agency on April 26.

The IEA forecasts that global EV sales will accelerate to 14 million units in 2023, rising 35% year on year and reaching a total market share of around 18% of sales.

National policies and incentives in the key markets of China, Europe and the US are expected to support rapid sales growth, with high oil prices highlighted as another factor that could boost government support and consumer appetite for electric vehicles going forward.

In China, the phasing out of government subsidies for EVs is expected to be offset by sustained support at the regional level and strong market fundamentals, while the national sales target of EV's share of sales reaching 50% by 2030 across "key pollution control regions" and 40% across the country remains in place.

According to the IEA, Chinese EV sales in the first quarter of 2023 were 20% higher year on year, with sales for the full-year forecast to achieve an annual growth rate of 30% for a sales share of more than 35%.

In the US, the IEA forecasts EV sales growth of 60% year on year in 2023 for a 12% market share supported by government policies such the Inflation Reduction Act, the adoption of California's Advanced Clean Cars II and the newly proposed emissions standards from the US Environmental Protection Agency.

In Europe, EV sales are forecast to grow by 25% year on year for a 20% market share supported by the EU's Fit for 55 package, which targets a 100% reduction in emissions for all new cars and vans from 2035 relative to 2021 levels.

By 2030, the IEA forecasts electric vehicle sales across these three key markets will achieve a 60% share of total sales as government policies and market fundamentals support accelerated demand growth going forward.

Globally, the agency forecasts that more that one in every three new cars sold in 2030 will be electric.

"When we look at the penetration of new clean energy technologies... I can confirm that a new energy economy it is emerging and it is emerging much faster than many stakeholders think," said IEA Executive Director Fatih Birol.

"The outlook for electric is certainly very upbeat with implications for the car industry as well as oil markets and our collective ability to meet our climate goals," he added.

Global plug-in electric vehicle sales reached 874,218 units in February, a 48% increase year on year, according to S&P Global Commodity Insights' monthly EV Essentials report.

Supply of critical materials must increase to meet EV battery demand

Amid accelerating growth in EV sales, the IEA noted the increasing demand for batteries and critical raw materials adding that around 60% of lithium, 30% of cobalt and 10% of nickel global demand was for EV batteries.

"As has already been seen for lithium, mining and processing of these critical minerals will need to increase rapidly to support the energy transition, not only for EVs but more broadly to keep up with the pace of demand for clean energy technologies," it said.

While noting the importance of increasing availability of critical minerals, the IEA also noted the importance of developing new battery technologies that require smaller amounts of these materials, in addition to ramping up battery recycling capacity.

"Reducing the need for critical materials will also be important for supply chain sustainability, resilience and security," it said.

Although EV supply chains are expanding and diversifying helped by new government incentives such as the Net Zero Industry Act and the US IRA, the IEA noted that battery manufacturing remains highly concentrated in certain regions, with China still the leading producer of batteries and other EV components.

According to the IEA, 35% of all EVs exported in 2022 came from China. Europe was the country's largest trading partner for both electric cars and their batteries.

The IEA noted that in light of this dependence governments are seeking to position themselves in global supply chains, with a focus on increasing domestic capacity, as evidenced by the new rules for the production, recycling, and repurposing of batteries put forward by legislation such as the US IRA and the EU Battery Directive.